Those Gas Prices Did Bite Restaurants; NRA RPI Sinks Back

July 6, 2011

The only surprising thing is that it didn’t happen sooner. The surge in gasoline prices from February through May finally caught up with the restaurant industry in May. Pronounced drops in same-store sales, customer traffic and operator confidence drove the National Restaurant Association’s Restaurant Performance Index back below the point separating expansion and contraction. The overall index dropped a full point to 99.9 in May. It was the first time the RPI was below the 100 tipping point since November last year and only the second month below the mark since September. One current capital expenditure marker fell while that tracking plans for such purchases was the only indicator to rise in May.

Current same-store sales fell 1.9 points and customer traffic was off 1.1 points, helping push the Current Situation Index down 1.1 points to 99.2. The current labor and capital expenditure indicators each fell 0.7 point.

The Expectations Index also took a hit, falling nearly a full point to 100.6. Expectations for business conditions in six months fell 1.4 points and expected same-store sales was down 1.3 points. The outlook for staffing also tumbled 1.2 points. Only the planned capital expenditures marker rose, up 0.3 point.

Despite the decline in the Index, NRA’s senior v.p. Hudson Riehle does believe the problems are short-term, a belief bolstered by the recent drop in gasoline prices. In the commentary accompanying the release of the May figures, he noted that the “economic fundamentals of the restaurant industry remain positive, which will likely lead to stronger performance in the months ahead.”